There are big changes coming to the way our credit scores are calculated. Financial professional Mindy McIntosh talked with WSMH about how these changes will impact all of us and offered tips to boost your credit score.
- Pay Off Debt – Pay your bills on time and make your monthly payments in full. This will always be a positive on your credit report. If you have credit card debt now, I recommend using the “snowball effect” to pay it off. Start with your lowest balance and work to pay that off in full, while still making the minimum payment on your other cards. Then move to the card with the next lowest balance. Paying these off one by one will help build momentum and encourage you to keep saving to pay off debt.
- Keep Balances Low – Even with this new change, it’s important to keep your balances low in relation to the credit you have available. This has always been a positive thing in scoring formulas, and that likely won’t change with trending data looking at balance trends over time.
- Open New Accounts When Needed – Don’t open a new credit card or apply for a loan if it isn’t necessary. Credit card companies are constantly offering deals or rewards for opening a new card, but don’t be tempted if you don’t need the credit. Opening new credit card accounts can ding your score, and with the new formula, you don’t want to have an excessive amount of credit available to you. That puts you at a higher risk for racking up a lot of debt quickly.